Wouldn't this methodology be a bit wasteful design wise? In addition to utilizing a specified factor of safety the loading is then taken to be occurring in one specific point as a combined whole when in reality the buckets are five distinct and spaced point loads?

I guess you are right. You could use a different diameter for each section of rope. eg getting thicker as you go up and the load increases. Not clear if that would reduce cost though. In practice the joints and method of attaching the buckets would complicate the issue.